Several people queued in Moscow to withdraw money from an ATM last Thursday. Konstantin Zavrazhin (Getty Images)
Urged by the devaluation of the ruble, the Central Bank of Russia has announced a "corralito" to savings in foreign currencies after midnight in Moscow.
From now until September 9, financial institutions will not be able to sell money from other countries to citizens, although they will be able to acquire it in exchange for rubles, and the population will only be able to withdraw a limit of 10,000 dollars from their accounts in foreign currencies.
From that limit, it will be mandatory to convert the cash to rubles at the exchange rate of the day of the operation.
Almost in parallel, the Fitch risk rating agency has further downgraded
the
Russian debt rating from B to C —within the junk bond category— and already predicts an
imminent
default .
The sanctions of the United States and the European Union after the invasion of Ukraine by Russian troops have sunk the Russian currency.
Before the conflict, it fluctuated at an exchange rate of around one euro per 85 rubles, but after the invasion of Ukraine it has fallen to almost half, about 165 rubles per euro.
In addition to prohibiting the use of the Swift system to the main entities of the country, the Western authorities, including Switzerland, froze the fund of 640,000 million dollars in foreign currencies that the Kremlin had for critical situations.
Curb outflow of foreign exchange
The monetary authority assures that its restrictions will hardly affect the population because, according to its figures, 90% of deposits and accounts in foreign currency do not exceed 10,000 dollars.
The measure is aimed at curbing the outflow of foreign currency from the country after severe retaliation imposed by the West.
The Russian central bank has published a text in a "questions and answers" format in which it explains to citizens the problems they will face these months.
When traveling, for example, the regulator warns them that they will not be able to withdraw cash in other currencies beforehand, to which is also added the veto on their bank cards because Visa and Mastercard suspended their activity in the country, but the agency tells them that “they can pay with the Mir card (the Russian interbank system) and withdraw currency in the destination country where it is accepted: Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, South Ossetia and Abkhazia”.
“The flow of dollars into the country is limited by sanctions, and this is the only reason for the special measures associated with the sale of foreign cash by banks,” admits the regulator.
Both the agency and the largest financial institution in the country tried to send a message of calm to the public: "Sanctions have no effect on deposits and accounts in rubles, their funds remain saved and operations will be available at all times."
This measure is added to a battery of actions to avoid economic collapse that include the suspension of almost all Stock Exchanges since the end of February, except for the foreign exchange market.
The issuing institute again postponed the reopening of the Moscow stock market for one more day on Tuesday, although it has authorized the resumption of operations with
repos
, the sale with mandatory repurchase of securities in the future.
In addition to these restrictions, the central bank raised interest rates from 9.5% to 20% on the first day of the offensive.
The financial entities assured their clients that this will not affect their current consumer loans and mortgages, although they have applied the rates to their new loans.